Summary

In its history since Independence, India has seen widely different economic experiments: from Jawharlal Nehru’s pragmatism to the rigid state socialism of Indira Gandhi to the brisk liberalization of the 1990s. So which strategy best addresses India’s, and by extension the world’s, greatest moral challenge: lifting a great number of extremely poor people out of poverty?

Bhagwati and Panagariya argue forcefully that only one strategy will help the poor to any significant effect: economic growth, led by markets overseen and encouraged by liberal state policies. Their radical message has huge consequences for economists, development NGOs and anti-poverty campaigners worldwide. There are vital lessons here not only for Southeast Asia, but for Africa, Eastern Europe, and anyone who cares that the effort to eradicate poverty is more than just good intentions. If you want it to work, you need growth. With all that implies.

about
Jagdish Bhagwati and Arvind Panagariya

Jagdish Bhagwati is university professor of economics at Columbia, and a long time fellow at the Council on Foreign Relations. A native of India, Professor Bhagwati studied at Cambridge University, MIT, and Oxford before returning to India in 1961 as professor of economics at the Indian Statistical Institute. He is the author of many books, among them In Defense of Globalization. Arvind Panagariya is Professor of Indian Economics at Columbia. He is a non-resident senior fellow at the Brookings Institution. He has been the chief economist of the Asian Development Bank and a professor of economics and co-director, Center for International Economics, University of Maryland at College Park. He is the author of, among other books, India: The Emerging Giant.

Arvind Panagariya is a professor of economics and Indian political economy at Columbia University, a non-resident senior fellow at the Brookings Institution, and a past chief economist of the Asian Development Bank. A leading trade theorist of his generation, Panagariya has written prolifically on global trade policy issues and economic reforms in India. Author of a dozen books, his technical papers have been published in the leading journals including the American Economic Review, Quarterly Journal of Economics, and Review of Economic Studies while his policy papers have appeared in Foreign Affairs and Foreign Policy. Panagariya writes an influential monthly column in the Times of India and has been honored with the Padma Bhushan.

reviews

George A. Akerlof, Nobel Laureate in Economics, 2001“Jagdish Bhagwati and Arvind Panagariya are two of the great intellectual lights behind one of the greatest miracles of economic history: the economic reform of India, and its subsequent takeoff. It is not just the well-to-do who have benefited, but, especially, the poor. The lessons from the spirit of 1991 are not just relevant for India today; they are also of prime importance for the billions of citizens of low income countries around the globe.”Martin Feldstein, George F. Baker Professor of Economics at Harvard University and president emeritus of the National Bureau of Economic Research“In this important book the two leading experts on India’s economy refute the claims of those who reject pro-growth policies in favor of redistribution schemes. India’s experience in the past two decades shows how a nation’s economic growth reduces poverty and improves the well-being of disadvantaged groups. Bhagwati and Panagariya explain what India needs to do now and how other countries can learn from India’s experience.”Hernando de Soto, economist and author of The Mystery of Capital“Assembling reams of evidence from India’s astonishing economic success story, Bhagwati & Panagariya make an unbeatable case for why market reforms are essential to economic growth—and improving the lives of the poor. Serious reformers throughout the developing world cannot ignore this book or Bhagwati’s work throughout the years.”Ernesto Zedillo, director of the Yale Center for the Study of Globalization and former president of Mexico“Every important developing country should be the subject of a masterful book like this. Bhagwati and Panagariya have paid a great service to India—and actually other emerging countries—by writing it. If it’s a must read for scholars and practitioners of economic development, it should be absolutely mandatory for the Indian political leaders."

Publishers Weekly“[Bhagwati and Panagariya] assert that India’s economic development is relevant to the developing world as a whole, and, in lively fashion, rebut myths of growth and poverty under the Jawharlal Nehru and Indira Gandhi administrations… As much of the world struggles with elevated debt levels, the vision of India as ‘a role model for reform today’ has applications reaching beyond the developing world.”

Washington Examiner“All economic correlations are complex, and many factors are at play, but Why Growth Matters shows how the poor benefit from economic development and which regulations still stand in the way. As Pope Francis opens a discussion on reducing poverty, the book could not have come at a better time.”

James Crabtree, Financial Times“This latest contribution from Jagdish Bhagwati and Arvind Panagariya, two Indian-born economists at Columbia University, is welcome. In Why Growth Matters, the duo provide perhaps the most full-throated defence to date of India’s economic liberalisation, which began in 1991 and is widely understood to have led to a period of fast growth over the past decade.“

Finance and Development (International Monetary Fund)“For those who have followed India’s recent growth story, Why Growth Matters is a useful summary of both the history of economic reform in India and of the controversies these reforms have generated, as well as a detailed and practical explication of what is necessary for the future.”